Correlation Between ALM ES and Esfera Robotics

Can any of the company-specific risk be diversified away by investing in both ALM ES and Esfera Robotics at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ALM ES and Esfera Robotics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ALM ES Actions and Esfera Robotics R, you can compare the effects of market volatilities on ALM ES and Esfera Robotics and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ALM ES with a short position of Esfera Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALM ES and Esfera Robotics.

Diversification Opportunities for ALM ES and Esfera Robotics

0.94

Correlation Coefficient

ALM ES  Esfera Robotics

Almost no diversification

The 3 months correlation between ALM and Esfera is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding ALM ES Actions and Esfera Robotics R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esfera Robotics R and ALM ES is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ALM ES Actions are associated (or correlated) with Esfera Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esfera Robotics R has no effect on the direction of ALM ES i.e., ALM ES and Esfera Robotics go up and down completely randomly.

Pair Corralation between ALM ES and Esfera Robotics

Assuming the 90 days trading horizon ALM ES Actions is expected to under-perform the Esfera Robotics. But the fund apears to be less risky and, when comparing its historical volatility, ALM ES Actions is 1.53 times less risky than Esfera Robotics. The fund trades about -0.12 of its potential returns per unit of risk. The Esfera Robotics R is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  35,573  in Esfera Robotics R on December 26, 2024 and sell it today you would lose (2,193) from holding Esfera Robotics R or give up 6.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.33%
Values	Daily Returns

ALM ES Actions  vs.  Esfera Robotics R

ALM ES Actions

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALM ES Actions has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unfluctuating performance, the Fund's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the fund investors.

Esfera Robotics R

Risk-Adjusted Performance

Very Weak

Over the last 90 days Esfera Robotics R has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Esfera Robotics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ALM ES and Esfera Robotics

The main advantage of trading using opposite ALM ES and Esfera Robotics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALM ES position performs unexpectedly, Esfera Robotics can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Esfera Robotics will offset losses from the drop in Esfera Robotics' long position.

The idea behind ALM ES Actions and Esfera Robotics R pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Share Portfolio module to track or share privately all of your investments from the convenience of any device.